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Welcome to Sharpe Edge, Sharpe Pritchard’s local government legal hub on Local Government Lawyer.

Sharpe Edge features news, views and analysis from our team of specialist local government lawyers working at the heart of the latest legal developments. Sharpe Edge platform is also the only place where local government lawyers can get e-access to two law books by our Head of Local Government Rob Hann: The Guide to Local Authority Charging and Trading Powers (‘LACAT’) and The Guide to Local Authority Companies and Partnerships (‘LACAP’).

 

                                                                                                  

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Becoming More Inclusive: VAT and Public Procurement

<a href=Juli Lau, Natasha Barlow and Beth Edwards examine the recently published Public Procurement Regulations 2021, focussing upon amendments to the thresholds within various procurement regimes.

 

 

The recently published Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (the “Regulations”) make a number of amendments to the thresholds within the various procurement regimes which will come into force on 1st January 2022.

What changes are made by the Regulations?

New Figures for Thresholds

The new figures are as follows:

Public Contracts Regulations 2015 (“PCR 2015”)
Works contracts: £5,336,937
Supply and service contracts awarded by central government: £138,760
Supply and service contracts awarded by subcentral government: £213,477
Utilities Contracts Regulations 2016 (“UCR 2016”)
Works contracts: £5,336,937
Supply and service contracts: £426,955
Concessions Contract Regulations (“CCR 2016”)
Concession contracts: £5,336,937

VAT Inclusive

In addition to the new rates, the Regulations also amend the relevant legislation to make the thresholds inclusive of VAT.

Although the thresholds for contracts covered by the Light Touch Regime under the PCR 2015 (£663,540 for services) and the Defence and Security Public Contracts Regulations 2011 (“DSPCR 2011”) (£4,733,252 for works contracts and £378,660 for supply and services contracts) have not changed, those figures are also now inclusive of VAT.

Why have these changes been made?

The Explanatory Memorandum published alongside the Regulations states that the threshold amounts have been changed in line with the biennial review requirements in the PCR 2015, UCR 2016, and CCR 2016 to ensure that the UK’s domestic thresholds correspond in sterling with the special drawing rights in the GPA.

Since the UK left the EU, it has become an independent party to the GPA rather than through its EU membership. The EU has an arrangement under the GPA whereby it does not include VAT in its thresholds due to the different rates of VAT across its member states, instead imposing a 13% reduction to all thresholds. This arrangement no longer applies to the UK and as such, the UK’s thresholds will now include VAT.

Commentary

Contracting authorities should bear in mind that the combination of the updated thresholds and the VAT inclusion provisions have in real terms led to a reduction of the threshold levels. As such, from 1st January 2022 more contracts will be captured by the relevant procurement regulations, meaning authorities will have to ensure they comply with the rules within the relevant regime.

The Government have stated that they intend to publish additional guidance in the form of a Procurement Policy Notice, which contracting authorities should consider carefully.

We advise contracting authorities on all manner of issues relating to public procurement and our experts are on hand to guide authorities through the intricacies of the Regulations and to advise on any other procurement related issues.

Juli Lau is a Legal Director, Natasha Barlow is a Trainee Solicitor and Beth Edwards is a Paralegal at Sharpe Pritchard LLP.


For further insight and resources on local government legal issues from Sharpe Pritchard, please visit the SharpeEdge page by clicking on the banner below.

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This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email This email address is being protected from spambots. You need JavaScript enabled to view it.

LACAT BookFREE download!

A Guide to Local Authority Charging and Trading Powers

Written and edited by Sharpe Pritchard’s Head of Local Government, Rob Hann,

A Guide to Local Authority Charging and Trading Powers covers:

• Updated charging powers compendium          • Commercial trading options

• Teckal ‘public to public’                                    • Localism Act

FREE DOWNLOAD

LACAT BookAvailable to buy:

A Guide to Local Authority Companies and Partnerships

An invaluable, comprehensive toolkit for lawyers, law firms and others advising
on or participating in Local Authority Companies and Partnerships”

- Local Authority Chief Executive

BUY NOW

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